IN HEAT OF CURRENCY CHAOS, TRADERS COOLLY PAN FOR GOLD

Sharon StangenesCHICAGO TRIBUNE

It has been an exciting 10 days for Don Lloyd, though one can hardly tell it from his relaxed smile and manner.

As head of the night trading desk at Chicago`s Harris Bank, Lloyd, a vice president of foreign exchange, is one of the small army of currency traders who have leapt from the unknown into the public consciousness thanks to wild fluctuations in the world`s money markets.

''We`ve had a lot of really good volatility,'' Lloyd says of his work recently. ''All of the last eight or nine days are as busy as I`ve ever seen it.''

Volatility, in the vernacular of the trader, is opportunity. And opportunity in international currency trading, as the world has learned recently, means the potential for big profits.

''That`s why it`s been a pretty good week,'' Lloyd says.

Little resembling the sombersuited, conservative banker most people might expect to encounter when applying for a loan, Lloyd wears a pink Oxford-cloth button-down shirt open at the throat, navy chinos and beige suede bucks. The clothes are in keeping with the shift he works-2 p.m. to midnight-and the more relaxed mood of the bank after hours.

They also are indicative of the niche foreign-currency traders enjoy in the otherwise highly regulated world of banking. Some would call this a last bastion of pure free trade. On a typical day, as much as $750 billion will change hands in the world`s currency markets-more money than is involved in two months` worth of Wall Street stock trading. On a busy day, it can be $1 trillion.

The result is that currency traders, at banks, brokerage houses, exchanges or just seated at computer screens, have power over the world`s economies that would have seemed impossible 30 years ago. But they neither look nor act the part of global titans.

Lloyd and two casually dressed colleagues work in the open vistas of the 10th floor of Harris` glass-and-steel tower on LaSalle Street. They are huddled in the middle of the brightly lit room of cockpitlike desks, each cluttered with multiple small screens, computers, telephones and calculators. In the midst of this central outpost is a stack of squawk boxes with direct lines to places such as Wellington, New Zealand; Sydney; and Tokyo, crackling with distinct but distant voices. A TV showing Cable News Network hangs from the ceiling.

During the day, traders who occupy the center of the room wear dress shirts and ties and shout information to corporate advisers whose desks are next to the floor-to-ceiling windows. Each trader has a specialty, such as British sterling or Japanese yen, and the shouts, jangling telephones and voices from afar create an impressive din.

Harris was a pioneer in 24-hour trading to take advantage of breaking news, fluctuating prices and worldwide interest in foreign currencies, but other banks soon followed. A similar night crew is at work on the 17th floor of Continental Bank a few blocks down LaSalle Street, and another is ensconced at First National Bank of Chicago.

''Consider us the Asia-Pacific desk,'' Lloyd says about his shift, which prepares for trading as the next business day dawns in Tokyo and elsewhere in the Pacific Rim.

It was on Lloyd`s watch Sept. 13, a seemingly normal Sunday afternoon, that the first signs of what would erupt into front-page news were sighted.

The news was the devaluation of the Italian lira and an announcement that the Bundesbank, Germany`s central bank, would cut interest rates the next day. It was 15 hours before the amount of the rate cut was announced, however-a critical interval that allowed traders and companies that deal with foreign currencies to gear up for deals.

The result, say Continental Vice Presidents Robert Dopke and Alan Jirkovsky, was mayhem.

''The whole thing in the last week-and-a-half has been financial history in the making,'' Jirkovsky says.

The effect on countries as well as currencies was so startling that men and women at trading desks became instant news-media stars. CNN shot footage of trading at Harris and Continental. The Wall Street Journal ran a front-page story with the headline, ''How Currency Traders Play for High Stakes Against Central Banks''-accompanied by the phrase ''The Big Casino,'' a gambling allusion Lloyd and other bank traders reject.

''No, this is not gambling,'' Lloyd says. ''This is pure supply and demand. Gambling is probability. There is no probability here. There is supply and demand. We`re economists. When we make decisions we consider economics, politics and the psychology of the market.''

''A better way to say it (than gambling) is how you manage the risk,''

says Dopke of Continental. ''It`s a very calculated guess based on informed opinion.''

Discipline and flexibility are essential for successful traders, Lloyd says. A gambler sticks with a position no matter what. A disciplined trader quickly changes positions if he has made a mistake.

''Here you are paid to analyze quickly and make a decision. If you`ve made a mistake, you change it,'' Lloyd says. ''The great thing about this business is opportunity comes after opportunity.''

While he acknowledges he wants to tally a profit at the end of each day, Lloyd says he judges himself ''on whether I can look in the mirror the next day and answer, `Did I do my personal best? Did I trade prudently?`

''I equate it to sports,'' he says, drawing an analogy from the football he played at the University of Mississippi. ''At the end of the day, like the end of a game, you know whether you won or lost.''

''You can`t be a wallflower'' to succeed, Dopke says. ''You can`t be overanalytical. You have to be a decision-maker. You read the news, decide if it is good or bad and make an instant decision.'' After all, if someone is to profit on a piece of news, someone else has to take a loss, sometimes a big one.

As in many professions in which money changes hands quickly and often, those who excel come from a variety of backgrounds.

The slim and stylish Dopke`s first job with Continental 18 years ago was at the foreign-exchange window of a branch at O`Hare International Airport. He worked his way up to trading 12 years ago and has remained there ever since, a record remarkable for its length in trading and with one bank.

Dopke commutes to LaSalle Street from his home near the airport and does crossword puzzles to exercise his mind during lulls in the day. Like many traders, he wears a beeper. The downside of a job he obviously loves is that it can be a 24 hour-a-day commitment, with customers calling any time.

In contrast, the stocky Lloyd, who attended Ole Miss on a football scholarship, worked for banks in St. Louis and North Carolina before coming to Harris in 1987. A resident of the western suburbs, he likes the night desk in part so he is home in the day to be with his wife and three children. He says he checks in once or twice a day when he is off duty.

He compares traders to artists.

''What we do here isn`t taught. The ability to trade is instinctive,'' he says. ''You can study and learn technique and follow the trends, but there is something intrinsic to sense the change, to hear something and know to trade. ''The hard part is the service,'' he adds, ''being able to take the stress and provide a professional service and manner to a customer with chaos in the background.''

Lloyd discounts those who see foreign-exchange, or ''FX,'' traders as unrestrained cowboys.

''When I started we were cowboys,'' he says. ''That`s changed over the last 10 years. We`re older, more mature and more professional. We`re calmer because we`ve seen more.''

The size of the market, the pace of business and the setting in which traders work can detach traders from the reality that they are dealing with mind-boggling amounts of money.

At Continental, a $5 million trade is called a ''five-buck deal.''

''You don`t consciously think of millions of dollars,'' Dopke says.

''You really don`t (think of it as money) any more than when you play football you think that the guy that you`re going up against is going to be an All-American,'' says Lloyd. ''You just do the best you can.''

As volatile-and opportunity-laden-as the last two weeks have been, more foreign-currency roller-coaster rides may be on the horizon.

''There are a lot of adjustments to be made in Europe,'' Lloyd says.

''Then you`ve got an (American) election coming.''

He does not see a long-term impact of recent events, which he calls ''a normal phenomenon of the market, rare though it is. The market is finding equilibrium.''

The biggest effect, Lloyd suggests, may be on Harris Bank`s foreign-currency customers.

''I think people got a good taste of the risk they are dealing with,'' he says. ''It was an eye-opening experience.''